Shopify now using Cloudflare (not Fastly)

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Hi All,

I came across this insightful blog post about Fastly (the author is @Soumyazen at Twitter):

https://medium.com/@soumya.avi/reviewing-fastly-fsly-after-q…

While it’s mostly about Fastly and worth reading, I think there’s one particularly interesting piece of information I haven’t seen mentioned on this board earlier:

CTO of Shopify tweeted on Sep 22 about getting ready for the upcoming year’s end holiday season addressing Google Cloud Platform and Cloudflare in his tweet - but not Fastly! And he got a quick reply back from Cloudflare CEO:

https://twitter.com/jmwind/status/1308158484475793408

I think this explains a lot. First, it seems clear Shopify is now a Cloudflare customer, not a Fastly customer. Why else would Shopify CTO address Cloudflare and omit Fastly? The above blog post also links to a discussion where Shopify users started to notice already in July their CDN sometimes being Cloudflare not Fastly. Most likely Shopify was initiating migration around that time but it wasn’t yet visible in usage for Fastly then.

Second, Shopify can’t make such a switch overnight (they’ve been with Fastly from 2014 or so) so this must have been a part of this Q’s surprise for Fastly (“lower usage by few customers”). They were not surprised by TikTok ban in India which happened before their Aug ER/CC but by a long-time customer Shopify migrating to Cloudflare!

Lastly, I’m just guessing here, but I wouldn’t be surprised if Shopify was one of those customers Cloudflare CEO mentioned being bit by Fastly’s usage-based billing.

For Cloudflare this is of course fantastic news. They now have a new major customer (one of the biggest winners of the COVID-19 initiated transformation) and they won it over from the their main rival. What a great customer reference it will be for Cloudflare Sales in the future. And whatever technical edge Fastly may have in certain areas (startup times) clearly those were not relevant enough for Shopify when considering their business overall and deciding to switch to Cloudflare. (In theory it could also be the other way around - Cloudflare had something Fastly couldn’t match but we’ll probably never know the exact details so not much point in speculating further.)

And I’m sure everyone can imagine this kind of migration is not cheap or trivial effort for Shopify so they must have carefully weighted long-term pros and cons of both platforms and concluded that even considering the additional cost of migration Cloudflare is still the more attractive platform for them in the years to come.

All in all, I see this as a very important victory for Cloudflare and I have even less regrets than before selling FSLY and reallocating to NET last week.

Thanks.

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Interesting observations.
It seems to me that SHOP might be a customer of both:
*) NET usage negotiated at a flat rate for a specified amount of usage
*) Keep FSLY in their back pocket for unanticipated surges in demand

This would allow SHOP to fully exploit both pricing models and have redundancy in the event of an outage at either NET or FSLY

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I just ran a test and this is what I see.

  • Request URL: https://cdn.shopify.com/shopifycloud/brochure/assets/manifests/online/examples-68f8473a6cde23a0365b0e251aba1ef5c354acd68124837525fbacf3940ac78f.css
  • Request Method: GET
  • Status Code: 200
  • ?Remote Address: 151.101.53.12:443

This response shows it came from the FSLY CDN cache.

  • x-cache: HIT, HIT
  • x-cache-hits: 3, 1
  • x-cdn: Fastly, http2

It’s possible that Shopify is using both NET and FSLY as I had written in one of my posts earlier. Multiple CDNs are common.

Cheers!

ronjonb

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Thanks Trendgetter,

This Twit and response seem pretty straightforward to say that Shopify is in the process of moving, or has already partly moved, or has already fully moved to Cloudflare. There isn’t much ambiguity to it. There’s simply no mention of Fastly. That seems like pretty big news.

Jean-Michel Lemieux
@jmwind
Just reviewed the Shopify traffic projections and capacity planning for this years holiday season.

Merchants, @ShopifyEng has your back. We’re stress testing daily.

Show of hands: @GCPcloud & @Cloudflare, are you ready?

Matthew Prince [CEO of Cloudflare]
Replying to @jmwind @ShopifyEng and 2 others
Yup. Looking forward to it.

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This is what Shopify’s development page says…

https://shopify.dev/tutorials/customize-theme-troubleshootin…

"CDN stands for content delivery network. Shopify provides merchants a world class CDN run by Fastly. Using a CDN means that your online store will load quickly around the globe, despite the Shopify servers being in North America.

You can read more about Fastly on the Fastly website…"

Cheers!

ronjonb

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Two thoughts.

  1. It’s possible that the Shopify development page might not be updated to reflect the recent tweet suggesting that SHOP uses Cloudflare (to the exclusion of FSLY).
  2. This might be a non-event! Here’s a post from the SHOP community forum dated June 2019 where a member writes about SHOP using Cloudflare. Here’s an excerpt:
    “Earlier this year, Cloudflare started work something with Shopify to provide all merchants sites with Cloudflare’s performance and security benefits. With this integration, they eliminate the need for Shopify merchants to proxy traffic on Cloudflare.”
    https://community.shopify.com/c/Shopify-Discussion/How-to-us…
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At the least, the relationship is not new. There’s a Shopify case study on the Cloudflare site referencing Black Friday 2019:

https://www.cloudflare.com/case-studies/shopify-powering-the…

Clearly they’ve been partnering for some time.

ronjonb, were you testing shopify.com? I see the same x-cdn response header you do. In addition to Fastly, some of the requests return AKAM or akamai. Shopify appears to be playing the field in terms of CDNs. No Cloudflare…yet.

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I’m confused about why these companies would be upset about their usage based billing in Q2. Usage based is what they signed up for… If the usage was higher during the period the bill was going to be higher. You can’t just have the benefits of the usage billing as a customer on the low usage side.

I find it very hard to believe a company like Shopify (and other large companies) didn’t expect this and are leaving Fastly because they were “shocked” by their bills in Q2. This is pretty big speculation based on a tweet that says nothing about Fastly. It is more likely that they do (and have been for some time) sourcing multiple CDNs. But hey… FSLY is an easy target right now

Bnh91

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Bnh91,
I agree with you.
We don’t have sufficient facts to say Shopify indeed changed CDNs.
What if the tweets b/w CloudFlare and Shopify was because of the CloudFlare DNS outage in July. Perhaps Shopify wanted to get a public reassurance for the holiday season from CloudFlare team, Matthew Prince stepped up?

Likely Shopify was already working with both CDNs. We don’t know in what proportion earlier vs now. Lots of unknowns.

Usage based billing:
Here is how Fastly does billing:
https://docs.fastly.com/en/guides/how-we-calculate-your-bill…

They have a tiered structure. I am assuming as usage goes up bandwidth $ rate drops. Its a win-win. Any vendor that gives a flat rate to a high growth company like Shopify is at risk of getting hosed, which we don’t want as investors.
If CloudFlare is doing flat rate now, IMO, they will switch to usage pricing model for enterprise customers at some point.

That said, there is no reason why clients should be surprised with their bills. In every enterprise sale I have been in(different industry), we estimate billing range for the quarter, get sign off from client upfront, provide weekly reports with $ #s, send monthly invoices. For large clients, we get flak if variance is more than ~5%. Client’s Finance team’s first Q will be to their own line management that used our service as to why they could not forecast accurately.

On the link above, Fastly even has a tool for client’s to estimate monthly bill.

There is something else going on……

For the record, I exited FSLY last week.

  • F8
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This is interesting and definitely something to keep an eye on… but I’m not sure it’s a reason to jump ship now.

A company as large and as reliant on the web as Shopify MUST have multiple CDNs, so I would assume they use both.

One thing I am a little curious about is if their CDN/edge bill is getting so large that they may build out their own network.

The Shopify CTO Tweeted this out on September 30… didn’t name any partners and I asked him specifically if they used Fastly for this, but he didn’t reply.

"Our goal for the last year has been to get online store generation as optimized and close to buyers as possible.

We’ve rolled out the new rendering pipeline and now are moving dynamic page gen to the edge. Starting in Australia, preliminary results show ~65% TTFB improvement"

Someone asked him this:
“Does this mean you are rending every page hit at the edge or you trigger rebuilds at the edge when needed?”

And he replied:
“This is a smart edge, that includes a static cache but can also regenerate full pages from fresh shop data (eg, inventory changes or shop settings). So yes, the entire online store is at the edge and not just a cache of a static page but can be dynamic too. It’s pretty neat tech.”

https://twitter.com/jmwind/status/1311290078136799241?s=20

It seems like they built this on their own.

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I think this explains a lot. First, it seems clear Shopify is now a Cloudflare customer, not a Fastly customer. Why else would Shopify CTO address Cloudflare and omit Fastly? The above blog post also links to a discussion where Shopify users started to notice already in July their CDN sometimes being Cloudflare not Fastly. Most likely Shopify was initiating migration around that time but it wasn’t yet visible in usage for Fastly then.

This is how rumors get started on Twitter. LOL. Before you come on the board with rumors don’t you think it would make more sense to ask Shopify? So if this CTO would have mentioned Amazon would you be thinking they dropped everyone and moved to Amazon?

All in all, I see this as a very important victory for Cloudflare and I have even less regrets than before selling FSLY and reallocating to NET last week.

I think they call this confirmation bias. :slight_smile:

Andy

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Austin, I am almost certain they are using FSLY as the edge.

To be able to scale quickly without any performance hit is the top priority for Shopify ( specially during the spikes in the Holiday season).

They are surely using dual CDNs and I think FSLY’s edge is going to do the heavy lifting ( needed for Scale and Performance).

The CTO not replying to your question is pretty much a “Yes” in my opinion.

This statement from Shopify makes that assumption pretty valid!

"A Content Delivery Network or Content Distribution Network (CDN) is a group of servers dispersed around the world. It distributes the content delivery load through the server closest to your visitor’s location, making local user experiences faster.

Since more ecommerce sites are going global, a CDN—or in the case of Shopify, dual CDNs—is a non-negotiable ingredient for platform performance.

Shopify offers a world-class CDN powered by Fastly at no extra cost. Shopify stores will come up almost instantaneously anywhere in the world, including the U.S., U.K., South America, southern Africa, the Australia and New Zealand (APAC) region, and Asia.

There are now fewer, more powerful Fastly Points of Presence (PoPs) at strategic locations around the world. High-density PoPs enable them to serve more from cache, including static and event-driven content. This improves your cache hit ratio, resulting in better user experiences."

Source: https://www.shopify.com/enterprise/site-performance-page-spe…

The PoP map in the site is also FSLYs!

Cheers!

ronjonb

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Shopify has been a longer time Cloudflare customer already. There also is a Shopify case study on Cloudflare’s website which refers to last year’s Black Friday season:
https://www.cloudflare.com/case-studies/shopify-powering-the…

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Hi Guys,

I am not sure if Shopify is moving away from Fastly, but I wanted to point 2 in my opinion things which I do not see in any of the posts/responses on this board.

  1. CloudFlare is launching distributed data objects at the edge which is currently in beta. Full info at:

https://blog.cloudflare.com/introducing-workers-durable-obje…

The part that is related to Shopify is:

"Durable Objects have infinite uses. Here are just a few ideas, beyond the ones described above:

Shopping cart: An online storefront could track a user’s shopping cart in an object. The rest of the storefront could be served as a fully static web site. Cloudflare will automatically host the cart object close to the end user, minimizing latency."

  1. Usage model - in fact CloudFlare DOES support both flat rate and has a billing usage model. So its not one or another, and they are not loosing money due to heavy usage.

  • Flat rate comes from the actual monthly service fee such as Pro, Business and Enterprise (North of $5k/month)

  • Usage charges come from their advanced features, some charged by number of queries, some bandwidth, some per user: Argo smart routing, Load Balancing, Advanced rate limiting filters, per user charges for their various Team/Gateway services, additional advanced feature with flat monthly rate, etc. So a business client may start with $200 monthly fee, but due to usage and enabling advanced feature to pay $1,000+ per month.

Another point I want to make is that by using Argo smart routing, keeping more objects in the cache by utilizing their advanced rule engine, run apps at their edge, using advanced optimization features, the end customer actually saves money from bandwidth - which is way more expensive if charged by the 3 big cloud providers (AWS, Azure, Google Cloud). Clients may save further $ from additional CPU processing time/charges by the cloud providers, by moving the compute part of their apps at the edge.

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Also another thing I forgot which I do not see being mentioned. Fastly gross margin of 59% (worse than Snowflake and they pay huge bills to the big 3 cloud providers) vs Cloudflare 77% - is this not concerning? If Fastly is only usage based billing, other competitors in the field, especially Cloudflare can put pressure on their margin and pricing.

In addition Cloudflare is already able to offer services much cheaper than AWS Lambda (Amazon’s version of serverless compute), so if Fastly wants to compete on pricing whenever they launch their Compute@Edge service, they can run into further pressure from Cloudflare which has much better margin.

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rdgyy,

FSLY has better operating margins than Cloudflare. I don’t know alot about the accounting differences between the two companies, but it looks like Fastly includes some expense in cost of revenue that Cloudflare counts as OpEx. So the cost is just being moved down the income statement.

Bnh91

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FSLY has better operating margins than Cloudflare. I don’t know alot about the accounting differences between the two companies, but it looks like Fastly includes some expense in cost of revenue that Cloudflare counts as OpEx.

That is correct. Cloudflare applies the cost of supporting the infrastructure for their free users in the Sales and Marketing bucket. Fastly who does not have any free users applies all infrastructure costs to the Cost of Revenue (cost of goods sold).

Operating margin is the best metric to use for an apples to apples comparison between the two as they treat cost of revenue slightly different.

Regards,
A.J.

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Look folks, yall are trying to jump into the weeds without doing a full investigation. Companies use multiple CDN’s all the time for different things. In a matter of seconds I was able to find out where Shopify is still using FSLY over NET. The main website for most organization will probably use a company such as NET due to security where as FSLY is used for speed.

If you go to a CDN Finder tool and put in the main website, sure Shopify says NET (expected) but if you do www.shopify.com/checkout then guess what, its all FSLY. Think about what their main CDN would be used for in relation to what they’re dominate at.

Overall this thread is just speculation along with others. Lets do some more due diligence before trying to scare more and more people away from FSLY.

BarrelHaus

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Here is my take: It doesn’t even matter who got the Shopify deal. Both Fastly and Cloudflare will be fine in the short term and they will keep on growing because this is an important emerging market. At the same time, it shows the potential weakness of the CDN market in general which has been discussed already. CDN in my view is a hardware game, and in the long term, competitors will eat away each other’s margins. As such, it doesn’t bode well for both of them (in that specific market).

From my understanding Fastly is more exposed to this market. That would make me a bit worried as a shareholder. Cloudflare seems to be in more markets, which is good since they don’t rely on CDN so much. On the other hand, it always seemed to me that they lack focus.

Take this with a grain of salt, though, since I never owned any of these companies and lack the knowledge to have a firm opinion. But this is the main reason I never got into these stocks. I struggled to see the strategy towards a durable competitive advantage.

Niki

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